Thursday, June 11, 2009

Increasing scrutiny of corporate behavior, Google is hoping to dissuade the Department of Justice from bringing an antitrust case. For several months, Google has been explaining to regulators and journalists that, contrary to the predatory image painted by competitors, the company is fragile. It has made its case in Washington, D.C., New York, and Brussels, hoping to dissuade the U.S. Department of Justice and European regulators from bringing an antitrust case against the company.

After the lax regulatory atmosphere of the Bush administration, the Obama administration appears to be increasing its scrutiny of corporate behavior. The new head of the Justice Department's antitrust division said in a recent speech that the department would be taking a more aggressive approach with companies that use their dominant position to stifle competition. In a speech last year, before her appointment to the Justice Department, she said that Google had acquired a monopoly in online advertising. Google also faces Justice Department scrutiny over its proposed settlement with book publishers and authors, Federal Trade Commission scrutiny over board members who also serve on Apple's board, and a Justice Department inquiry into the possibility that Silicon Valley companies such as Google and Apple colluded to avoid poaching employees from one another. Last year, Google abandoned a planned advertising deal with Yahoo to avoid an antitrust showdown with the Justice Department.

During the Google presentation, Adam Kovacevich, the company's senior manager of global communications and public affairs, acknowledged that the company's success has brought increased scrutiny. But he insisted that Yahoo (NSDQ: YHOO) was in a similar position a decade ago, citing a 1998 Fortune article that declared, "Yahoo has won the search engine wars."

"We also know our position is fragile," he said. In keeping with Google's emphasis on data and metrics, Google legal counsel Dana Wagner, who coincidentally used to work in the antitrust division of the Justice Department, offered an anecdote in support of this claim.